Global Partners LP has signed an agreement to acquire 100% of the membership interests in a West Coast crude oil and ethanol facility near Portland OR from Cascade Kelly Holdings LLC. The total purchase price is expected to be approximately $95 million.
The transaction includes a rail transloading facility serviced by the BNSF Railway, 200,000 barrels of storage capacity, a deepwater marine terminal, a 1,200-foot dock, and the largest ethanol plant on the West Coast. Situated along the Columbia River in Clatskanie OR, the site is located on land leased under a long-term agreement from the Port of St Helens. In November 2012, the facility began transloading unit trains of crude oil.
“This transaction capitalizes on our advantaged logistics and enables Global to supply cost-competitive crude and ethanol to refiners and customers on the West Coast,” says Eric Slifka, Global’s president and chief executive officer. “From our origination hub in the Bakken region of North Dakota, we will now have destination assets on both coasts. The Oregon site is linked via BNSF to the Basin Transload facility in Beulah ND while our Albany NY terminal is connected via single line haul on Canadian Pacific to the Basin Transload location in Columbus ND. This facility also creates a link between the Western Canadian Sedimentary Basin and Pacific refiners. With the pending closing of our Basin Transload acquisition this quarter, these new assets increase our capability to transport crude from the US and Canadian mid-continent and extend our virtual pipeline to the West.
“Because certain regions of the West Coast energy market have limited pipeline access, the dynamics of sourcing and logistics for PADD V refiners and customers are comparable to those we see in the Northeast. As we have demonstrated to those customers, we believe that we can apply our rail and marine expertise to meet the demand for crude and ethanol on the West Coast. Given the 3.3 million barrels a day of crude refining capacity in PADD V, this facility represents an opportunity for Global to drive additional product volumes and enhance margins.”
Global’s purchase of Cascade Kelly Holdings, which has been approved by the board of directors of the Partnership’s general partner, Global GP LLC, is subject to customary regulatory approvals and various other customary commercial closing conditions. The purchase is expected to be completed by the end of the current quarter and is expected to be accretive to unit holders in its first full year of operation.
In addition to this transaction, this quarter Global expects to close its pending acquisition of a 60% interest in Basin Transload LLC for approximately $80 million. To finance these transactions, Global has arranged a $115 million increase in its bank credit facility and has secured a senior unsecured five-year note of up to $70 million from funds managed by GSO Capital Partners LP, the credit arm of The Blackstone Group.